DAGM Dag Media (MM)

NEW YORK, Nov. 7 /PRNewswire-FirstCall/ -- DAG Media Inc. (NASDAQ:DAGM) On October 11, 2006, we entered into a Stock Purchase Agreement with Mr. Guy Mushkat, the founder and Chief Executive Officer of Shopila Corporation, an e-commerce software developer and the operator of www.shopila.com. Pursuant to the terms of the Stock Agreement, we purchased 80% of the outstanding common shares of Shopila from Mr. Guy Mushkat, in consideration for $100,000 in cash, the issuance of 50,000 restricted shares of our common stock, and an option to purchase 50,000 shares of our Common Stock. In addition, we have replaced Mr. Guy Mushkat's personal guarantee of Shopila's liabilities up to, but not to exceed $90,000. Accordingly the purchase price is approximately $353,000 including liabilities assumed. Total net loss for the three month period ended September 30, 2006 was $117,000, or $(0.04) per basic and diluted share (based on 3.180 million shares) compared to a net loss of $96,000, or $(0.03) per basic and diluted share (based on 3.120 million shares) for the same period in 2005. Total net loss for the nine month period ended September 30, 2006 was $42,000, or $(0.01) per basic and diluted share (based on 3.156 million shares) compared to a net loss of $299,000, or $(0.10) per basic and diluted share (based on 3.115 million shares) for the same period in 2005. Loss from operations for the three month period ended September 30, 2006 was $251,000 compared to a loss of $163,000 for the same period in 2005, an increase of $88,000, or 54.0%. This increase is attributable primarily to an increase in Marketing expenses of $41,000 associated with the beginning operation of www.nextyellow.com and an increase in compensation expenses of $37,000 due to the adoption of SFAS 123R effective January 1, 2006. Net loss from continuing operations for the three month period ended September 30, 2006 was $190,000, or $(0.06) per basic and diluted share (based on 3.180 million shares), compared to a net loss of $58,000, or $(0.02) per basic and diluted share (based on 3.120 million shares), for the same period in 2005. The net loss was attributable to the increase in loss from operations and decrease in other income which was attributable primarily to the fluctuation in performance of the Company's portfolio and marketable securities. Loss from operations for the nine month period ended September 30, 2006 was $759,000 compared to a loss of $494,000 for the same period in 2005, an increase of $265,000, or 53.6%. This increase is attributable primarily to the increase of web development costs of $125,000 associated with the programming of www.nextyellow.com website, increase in marketing expenses of $57,000 associated with marketing expenses of www.nextyellow.com and an increase in compensation expenses of $118,000 relating to the adoption of SFAS 123R effective January 1, 2006, offset by a decrease in professional fees of $57,000. Net loss from continuing operations for the nine month period ended September 30, 2006 was $647,000, or $(0.20) per basic and diluted share (based on 3.156 million shares), compared to a net loss of $163,000, or $(0.06) per basic and diluted share (based on 3.115 million shares), for the same period in 2005. The increase was attributable to the increase in loss from operations and decrease in other income which was attributable primarily to the fluctuation in performance of the Company's portfolio and marketable securities. About DAG Media, Inc. DAG Media, Inc. (NASDAQ:DAGM), through its subsidiaries DAG Interactive, Inc. and Shopila Corporation is a provider of an innovative solutions to the online yellow pages, local search and e-commerce industries. This release contains forward-looking statements within the meaning section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are typically identified by the words "believe," "expect," "intend," "estimate" and similar expressions. Those statements appear in a number of places in this release and include statements regarding our intent, belief or current expectations or those of our directors or officers with respect to, among other things, trends affecting our financial conditions and results of operations and our business and growth strategies. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those projected, expressed or implied in the forward-looking statements as a result of various factors (such factors are referred to herein as "Cautionary Statements"), including but not limited to the following: (i) the successful consummation of this acquisition (ii) the successful sale of our directories business; (iii) the success of our new business strategy; (iv) potential acquisitions; (v) our limited operating history; (vi) potential fluctuations in our quarterly operating results; (vii) challenges facing us relating to our growth; and (viii) our dependence on a limited number of suppliers. The accompanying information contained in this release, including the information set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations," which can be found in our Form 10-QSB filed for the quarter ended September 30, 2006, identifies important factors that could cause such differences. These forward-looking statements speak only as of the date of this release, and we caution potential investors not to place undue reliance on such statements. We undertake no obligation to update or revise any forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements. DAG MEDIA, INC. CONSOLIDATED BALANCE SHEET (unaudited) September 30, Assets 2006 Current assets: Cash and cash equivalents $3,707,098 Marketable securities 2,221,549 Short term investment - insurance annuity contract - at fair value 1,108,154 Total cash and cash equivalents, marketable securities and short term investment 7,036,801 Other current assets 60,202 Due from purchasers- current portion 350,548 Total current assets 7,447,551 Property and equipment, net 17,606 Capitalized web development costs 135,695 Other assets 142,515 Due from purchasers- non current portion 531,510 Total assets $8,274,877 Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued expenses $ 94,324 Deferred subscription revenue 906 Income tax payable 341,680 Deferred gain from the sale of Jewish Directories- current portion 267,362 Current liabilities of discontinued operations 35,000 Total current liabilities 739,272 Long term liabilities: Deferred gain from the sale of Jewish Directories- non current portion $ 531,510 Commitments and contingencies Shareholders' equity: Preferred shares - $ .01 par value; 5,000,000 shares authorized; no shares issued ---- Common shares - $ .001 par value; 25,000,000 authorized; 3,255,190 issued and 3,186,460 outstanding 3,255 Additional paid-in capital 8,904,939 Treasury stock, at cost- 68,730 shares (231,113) Accumulated other comprehensive loss (214,139) Accumulated deficit (1,458,847) Total shareholders' equity 7,004,095 Total liabilities and shareholders' equity $8,274,877 DAG MEDIA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Nine Months Ended September 30, Ended September 30, 2006 2005 2006 2005 Subscription revenues, net $ 7,821 $ ---- $ 7,821 $ ---- Operating costs and expenses: Web development costs 12,336 ---- 125,330 ---- Marketing expenses 41,303 ---- 56,832 ---- General and administrative expenses 205,647 162,814 584,161 493,822 Total operating costs and expenses 259,286 162,814 766,323 493,822 Loss from operations (251,465) (162,814) (758,502) (493,822) Other income 61,603 105,048 111,342 330,549 (Loss) income from continuing operations before benefit for income taxes (189,862) (57,766) (647,160) (163,273) Discontinued operations: Gain (loss) on the sale of discontinued operations 72,918 (55,000) 680,718 (55,000) Gain(loss) from discontinued operations ---- 16,596 (75,129) (80,316) Income (loss) from discontinued operations 72,918 (38,404) 605,589 (135,316) Net loss $ (116,944) $ (96,170) $ (41,571) $ (298,589) Basic and diluted net gain (loss) per common share outstanding: Continuing operations $ (0.06) $ (0.02) $ (0.20) $ (0.06) Discontinued operations 0.02 (0.01) 0.19 (0.04) Total net gain (loss) per common share - basic and diluted $ (0.04) $ (0.03) $ (0.01) $ (0.10) Weighted average number of common shares outstanding - basic and diluted 3,179,721 3,119,764 3,156,423 3,115,101 DAG MEDIA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended September 30, 2006 2005 Cash flows from operating activities: Net loss $ (41,571) $ (298,589) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation and Amortization 20,061 11,142 Amortization of deferred compensation and non cash compensation 257,928 28,829 Gain on the sale of Jewish Directories (426,107) -- Realized loss (gain) on sale of marketable securities 70,861 (169,277) Gain on the sale of fixed assets (14,232) -- Changes in operating assets and liabilities: Other current assets (55,556) (11,817) Due from purchasers (58,881) -- Accounts payable and accrued expenses 48,046 (58,426) Income tax payable (25,652) -- Deferred subscriptions revenues 906 -- Assets and liabilities of discontinued operations (146,900) (110,037) Net cash used in operating activities (371,097) (608,175) Cash flows from investing activities: Proceeds from sale of marketable securities 2,541,023 14,412,975 Investment in marketable securities (2,562,194) (13,413,188) Investment in convertible loan (25,000) -- Purchase of fixed assets (18,729) -- Proceeds from sale of fixed assets 9,213 -- Capitalized web development costs (22,429) -- Cash received on sale of Jewish Directories, net of expenses 254,610 -- Assets of discontinued operations -- (6,072) Net cash provided by investing activities 176,494 993,715 Cash flows from financing activities: Dividend paid (314,246) (1,490,982) Proceeds from exercise of stock options 5,520 34,420 Net cash used in financing activities (308,726) (1,456,562) Net decrease in cash (503,329) (1,071,022) Cash and cash equivalents, beginning of period 4,210,427 3,547,742 Cash and cash equivalents, end of period $3,707,098 $2,476,720 Supplemental Cash Flow Information: Dividend declared but not yet paid -- $ 312,246 Taxes paid during the period $ 25,535 $ 169,268 Capitalized software acquired through issuance of stock and grant of option $ 125,602 -- Common stock issued for services performed $ 80,600 -- Non cash proceeds from the sale of fixed assets $ 33,080 -- DATASOURCE: DAG Media Inc. CONTACT: Assaf Ran, CEO, or Inbar Evron-Yogev, CFO, +1-212-489-6800 Web site: http://www.nextyellow.com/ http://www.shopila.com/

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